Low Prices at What Cost? Wal-Mart Watch’s 2005 Annual Report

Everyone loves a bargain, and Wal-Mart’s “always low prices” draw millions of Americans to its stores. In fact, 8 in 10 Americans shop at Wal-Mart’s stores. Is Wal-Mart really such a good value, or do consumers pay in other ways?

Where true retail competition still exists, Wal-Mart’s prices are usually the lowest. The company regularly monitors competitors’ prices and responds quickly by lowering its own. Wal-Mart has a “Never Be Beat” list of about 1,000 household items (such as toothpaste and toilet paper) on which it will not be undersold. But in many small town markets, little competition is left, leaving Wal-Mart free to set its own prices...

The broader issue, of course, is the hidden costs Wal-Mart imposes on American taxpayers. Wal-Mart is one of the biggest recipients of corporate welfare in the world. Year after year, Wal-Mart’s low pay and insufficient employee benefits programs leave hundreds of thousands of Wal-Mart workers to rely on Medicaid, food stamps, and public housing assistance to make ends meet. Call it the “Wal-Mart Tax.” It costs American taxpayers at least $1.5 billion in federal tax dollars every year, and hundreds of millions more in state and local subsidy costs.4

Wal-Mart pocketed over $10 billion in profit in 2004.5 The company reached this level of profitability, in part, by getting state and local governments to provide tax breaks and to pay for roads and utility connection at many of its new stores and distribution centers. A May 2004 report by Good Jobs First documented that Wal-Mart has received more than $1 billion in such subsidies.6

Finally, the issue of American jobs is central to the debate about Wal-Mart’s influence on our community. For years Wal-Mart proudly touted the number of American jobs created or retained through its “Made in America” program. However, as Wal-Mart abandoned the program and the philosophy of founder Sam Walton that American jobs were a commitment and a partnership, the company abruptly stopped updating its figures of American job creation.7

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